‘Specifically, the audit revealed serious issues relating to invoicing, delivery and performance reporting against both contracts.’

A G4S statement read: ‘The MoJ has advised G4S that the ministry does not have any evidence of dishonesty in relation to these contracts. Furthermore, G4S has no evidence of such conduct.’

Now the SFO will probe G4S over alleged erroneous billing from two courts it was paid to guard, to look for evidence.

The news came as Serco, also slammed for overbilling on a prisoner tagging contract, agreed to pay £68.5million back to the Government.

Grayling said: ‘This figure reimburses the Government for money owed on the electronic monitoring contract and for other costs incurred, including the cost of investigating these matters.

Unlike Serco, G4S has not yet agreed a position on repayment.’ G4S (4.8p lower at 248.9p) and the Government remain in dispute over how much should be paid. Even though the firm offered credit notes worth £24.1million, this was rejected.

Serco set aside £34million of its own costs from the investigation yesterday While shares rose more than 6 per cent after Serco said no more issues were found, G4S stock lost 2 per cent of its value.

But both firms have seen shares and reputations hammered by the accusations.

Serco (up 27.8p at 476.6p) has lost more than a third of its market value, relegating it from the FTSE100, as well as parting ways with chief executive Chris Hyman and a host of top directors.